CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...

 
CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
CANADA’S
NATURAL GAS AND
OIL EMISSIONS:
Ongoing Reductions,
Demonstrable Improvement
CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
GREENHOUSE GAS EMISSIONS
AND CANADA’S NATURAL GAS
    AND OIL INDUSTRY
CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
Canada’s Natural Gas and Oil Emissions:
                                                                 Ongoing Reductions, Demonstrable Improvement

                                                                 Contents
                                                                 Emissions:
                                                                 Ongoing Reductions, Demonstrable Improvement .                                                                        .  .  .  .  .  .  . E3
                                                                    Industry Overview.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                      .  .  .  .  .  .  . E5
                                                                    Technology Overview:
                                                                 		     The Path to Emissions Reduction.  .  .  .  .  .  .  .  .                                                       .    .    .    .    .    .    .   E7
                                                                 		     Technology Performance to Date.  .  .  .  .  .  .  .  .                                                        .    .    .    .    .    .    .   E9
                                                                 		     Near-Term / Potential Technologies.  .  .  .  .  .  .                                                          .    .    .    .    .    .    .   E22
                                                                 		     Ongoing Collaboration and Research .  .  .  .  .                                                               .    .    .    .    .    .    .   E26

                                                                 Emissions Intensity Performance Data.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                        .    .    .   E29
                                                                    Natural Gas, Natural Gas Liquids and Condensate.  .                                                                                    .    .    .   E30
                                                                    Oil Sands In Situ.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                        .    .    .   E31
                                                                    Oil Sands Mining. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                          .    .    .   E32
                                                                    Offshore.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .            .    .    .   E33

                                                                 Comparable Emissions Performance and Data Quality. .  .  .  . E34

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CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
Emissions:
Ongoing Reductions,
Demonstrable
Improvement

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CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
O
        il and natural gas will continue to be an important part
        of the world’s energy mix for the foreseeable future.
        Supplying affordable, reliable and cleaner energy to a                       Supplying affordable,
        growing global population will continue to be the goal
of Canada’s upstream energy industry.                                                reliable and cleaner
Climate change is a global challenge that requires global                            energy to a growing
perspectives and solutions. Advancing greenhouse gas (GHG)
emissions reduction is critical to realizing the vision for Canada                   global population will
to be a global natural gas and oil supplier of choice.                               continue to be the goal
Emissions reduction performance, including emission intensity,
is increasingly the basis for policies such as low-carbon
                                                                                     of Canada’s upstream
fuel regulations, carbon pricing, specific reduction targets                         energy industry.
and emission caps. It’s used to inform funding decisions by
governments, funding agencies and investors.

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CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
INDUSTRY OVERVIEW
Canada has the world’s third-largest oil reserves. Of the
168 billion barrels of Canadian oil that can be recovered
economically with today’s technology, 162.5 billion barrels are
in the oil sands. In 2020, Canada’s oil production averaged
4 million barrels per day (b/d), of which 94% came from
producing areas in Western Canada. Currently 99% of Canada’s
oil exports go to the U.S. but with improved market access and
infrastructure Canada can increase global market share.

2020 OIL                         2020 NATURAL
PRODUCTION:                      GAS PRODUCTION:

4
MILLION B/D
                                 16
                                 BILLION CF/D

Canada has vast reserves of natural gas, particularly in B.C. and
Alberta. In 2020, natural gas production averaged 16 billion
cubic feet per day (Bcf/d). Canada has enough natural gas to
meet domestic needs for 300 years, with enough remaining for
export. The export of natural gas as liquefied natural gas (LNG)
will enable Canada to access markets in Asia.

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CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
CANADA’S
                                                                          TOP EXPORT

The natural gas and oil industry is active
across the country, either through exploration,
development and production or through its
multi-billion dollar supply chain.
                                                                              19%
                                                                          OF EXPORTS ARE
                                                                          CRUDE OIL,
In 2019, exported oil, natural gas and
petroleum products earned $112.6 billion,
                                                                          NATURAL GAS
Canada’s top export by value.                                             AND OTHER
More information on Canada’s upstream
                                                                          PETROLEUM
petroleum industry is available at                                        PRODUCTS.
www.capp.ca
                                                                          VA L U E =
                                                                          $
                                                                              112.6
                                                                          BILLION

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CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
Technology Overview:
The Path to Emissions
Reduction

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CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
I
   nnovative technologies and process efficiency improvements
   are the main keys to reducing emissions across Canada’s
   natural gas and oil industry. Many producing companies are
   researching, developing and deploying technologies, and
the industry also has a significant commitment to collaboration
and knowledge sharing, aimed at improving performance across
                                                                                  Technological advances
the sector and contributing to Canada’s international climate                     are not aspirational, they
change commitments. Also, many technologies developed in
the industry are transferable to other industries and to other                    are actual: the industry is
producing jurisdictions internationally.
                                                                                  taking serious, substantial
The industry has a broad portfolio of innovative solutions to
deliver emissions reductions. Technological advances are not                      steps to reducing
aspirational, they are actual: the industry is taking serious,
substantial steps to reducing emissions intensity. The natural gas                emissions intensity.
and oil industry accounts for 37% of environmental protection
spending by industry, according to data from Statistics Canada.

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CANADA'S NATURAL GAS AND OIL EMISSIONS: Ongoing Reductions, Demonstrable Improvement - Canadian ...
Technology
Performance to Date
Across the upstream industry,
proven technologies have
been developed and deployed,
resulting in significant
emissions reductions.

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METHANE REDUCTION
In the oil and natural gas industry, methane is released when
natural gas is flared or vented. Methane is also released in small
leaks, called fugitive emissions, from valves and other equipment                 Among the world’s top
used in drilling and production. Canada has mandated a
reduction in methane emissions of 45% below 2012 levels by
                                                                                  10 petroleum exporters,
2025. Among the world’s top 10 petroleum exporters, currently
Canada alone has a methane reduction target.
                                                                                  currently Canada alone has
The upstream oil and natural gas industry is actively working to
                                                                                  a methane reduction target.
achieve this target. Reduction efforts are focused on tank vents,
pneumatics, pumps and similar fugitive emissions sources, plus
further reductions in venting and flaring.

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Examples of methane reduction activity:
                                                                 • Alberta Methane Field Challenge is a collaborative venture
                                                                   between industry, the Alberta government and the Alberta
                                                                   Energy Regulator to field-test new methane detection
                                                                   technologies including hand-held and fixed sensors, plus
                                                                   sensors mounted on drones and trucks.

                                                                 • Many operators, especially in the natural gas and
                                                                   conventional oil sectors, are exchanging dated equipment
                                                                   for newer equipment to eliminate methane leaks and small
                                                                   venting. For example, by the end of 2019 Cenovus had
                                                                   changed more than 1,000 high-bleed instruments and
                                                                   continues to advance this program.

                                                                 • NuVista Energy Ltd has been working hard to eliminate
                                                                   methane emissions, including using compressed air to drive
                                                                   pneumatic instruments and pumps instead of pressurized
                                                                   natural gas, thus eliminating routine methane venting.
                                                                   NuVista is also incorporating compressed air pipelines
                                                                   (from facilities to well pads) into the ongoing build out of
                                                                   their new Pipestone field. New wells at the Pipestone field
                                                                   have no routine methane venting.

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CARBON CAPTURE,
UTILIZATION AND STORAGE
Carbon capture, utilization and storage (CCUS) includes
several advanced technologies that capture emissions from
large industrial facilities before they reach the atmosphere.
Captured carbon dioxide (CO2) can be permanently stored
underground in stable geological formations, used to
enhance oil production from mature reservoirs, or used to
create value-added products.

                                                                                     Carbon capture unit at the Alberta
                                                                                 Carbon Conversion Technology Centre.

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Examples of CCUS:

• The Quest CCS facility captures and stores CO2 emissions
  from the Shell-operated Scotford Upgrader near Fort
  Saskatchewan, Alberta. The CO2 is safely captured and
  stored in an underground geological formation. Since it
  began operation in 2015, Quest has captured more than 6
  million tonnes of CO2, approximately equal to the annual
  emissions from 1.5 million cars.

• The Alberta Carbon Trunk Line (ACTL) system began
  operation in 2020. Operated by Wolf Midstream, the system
  captures CO2 from industrial sources near Edmonton and
  transports it to central Alberta where it’s injected into
  mature reservoirs for enhanced oil recovery and permanent
  storage by Enhance Energy. About 1.3 million tonnes of
  CO2 per year is currently captured from the North West
  Redwater Sturgeon Refinery and 300,000 tonnes from
  Agrium’s Redwater fertilizer plant.

• Suncor and Cenovus have acquired an equity financing
  agreement with Vancouver-based Svante, a Canadian
  cleantech startup, to accelerate the commercialization of
  Svante’s CO2 capture technology. The pilot started in 2019
  at Cenovus’ operations in Saskatchewan.
                                                                                 Carbon capture demo plant. Photo courtesy Svante.

                                                                           Based on the 2021 budget,
                                                                           the federal government’s CCUS
                                                                           target is to reduce emissions
                                                                           by at least 15 megatonnes of
                                                                           CO2 annually.

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In June 2021, oil sands operators
In March 2021, Alberta and Ottawa jointly                        Canadian Natural Resources Limited,
launched a new working group to advance                          Cenovus Energy, Imperial Oil Limited,
CCUS technology and deployment. The                              MEG Energy Corp and Suncor Energy
group is advised by representatives from                         announced formation of the Oil Sands
key Alberta industries including the natural                     Pathways to Net Zero Initiative.
gas and oil sector, and other experts.
                                                                 The goal of this alliance is to work
Additionally, the federal budget announced
in April 2021 proposed to introduce an
                                                                 collectively with the federal and
investment tax credit for capital invested                       Alberta governments to achieve
in CCUS projects along with other financial                      net zero emissions from oil sands
tools, with the goal of reducing emissions                       operations by 2050. The pathway is
by at least 15 megatonnes of CO2 annually.                       anchored by a major CCUS project to
This measure will come into effect in 2022.                      enable multi-sector ‘tie-in’ projects for
                                                                 expanded emissions reductions.

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FUEL GAS /                                                       • Waste heat recovery units (WHRU) use an energy recovery
                                                                   heat exchanger that transfers heat from high-temperature
ENERGY EFFICIENCY                                                  process outputs to another part of the process, offsetting
                                                                   the need to burn more fuel for heat or power generation.

                                                                   -   A WHRU can reduce emissions by 2,500 to 3,000 tCO2e
Emissions reductions can be achieved                             		    per well per year, or 30,000 to 78,000 tCO2e per plant
through fuel switching (primarily from                           		    per year for a gas-processing plant capacity 90 million
                                                                 		    cubic feet per day (MMcf/d).
diesel to natural gas) and improved
efficiency in equipment and processes at                         • Diesel displacement for drilling, well completions and
                                                                   natural gas processing facilities, such as using mobile
facilities of all sizes, across all upstream                       natural gas power generating / energy storage units for
operations. Technologies include:                                  existing electricity-powered drilling rigs.

                                                                 • Offshore flare recovery systems significantly reduce flaring
                                                                   of natural gas. Recovered gas can be collected and used
                                                                   for compression, injection / re-injection and enhanced
                                                                   oil recovery.

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Project lead Jason McGillivray helped design zero-bleed
                                                                              well-pad equipment at Groundbirch. Photo by Jason Dziver.

 Examples of fuel gas/energy efficiency:

• Tourmaline Oil Corp., Canada’s largest natural gas producer,             • Throughout its operations, Cenovus is exploring advanced data
  achieved an emissions intensity reduction of 46% between 2013              analytics for continued optimization opportunities. By using
  and 2018 and is targeting further methane and overall emissions            data analytics and artificial intelligence to improve operational
  reductions. Eliminating the use of diesel in its field operations is       efficiency, there is a significant opportunity to potentially improve
  among the technologies employed to achieve                                 environmental performance. Cenovus is optimistic these efforts
  this reduction.                                                            could eventually contribute to meaningful reductions in
                                                                             GHG emissions.

• In B.C., Shell Canada successfully brought the first ‘Generation
  4’ multi-well pad on stream in January 2018 at Groundbirch.              • Since 2018, NuVista Energy Ltd has been installing WHRUs at all
  This advanced well pad design utilizes zero-bleed electric valve           major operated Montney facilities. These units recover waste heat
  actuators (the mechanism that opens and closes a valve) to                 from compressor exhaust and use it to offset fuel use in other
  eliminate methane emissions that typically come from natural               plant processes. NuVista’s 10 WHRUs now avoid approximately
  gas-driven actuators. This new pad design reduces emissions by at          15,000 tonnes of CO2e per year.
  least 90%, the equivalent of taking more than 40 cars off the road
  for every well using this technology.

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COGENERATION
Upstream producers can use waste heat to generate
electricity, thus reducing emissions by avoiding additional
fuel combustion for electricity generation. The largest
opportunity exists in the oil sands sector, where both
mining and in situ operations use hot water or steam to
extract bitumen. Heating the water requires combustion
of natural gas or petroleum coke, but only a portion of the
heat generated is used in extraction. Operators can capture
waste heat through cogeneration to generate both heat
and electricity at the same time from the same fuel source.
Excess electricity not required for facility operation is sold to
the Alberta power grid. Cogeneration currently supplies 34%
of the province’s electricity.

Cogeneration offers a significant opportunity to reduce
emissions, through currently installed cogeneration and
potential new installations. In 2019, Alberta’s grid factor value
(GHG emissions per megawatt hour of electricity produced)
was 0.670 t/MWh compared to a grid factor of 0.25 to 0.30
t/MWh for cogenerated electricity. These cogeneration
systems reduce GHG emissions associated with electricity
production and steam generation by 30 to 40% compared to
electricity purchased from the Alberta grid and stand-alone
steam generation.

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Examples of cogeneration:

• Suncor Energy has a cogeneration unit under construction                              • Existing cogeneration projects in Alberta have a combined
  at the company’s Base Plant that will replace coke-                                     capacity of over 3,000 megawatts (MW):
  fired generation with lower-emitting natural gas-fired                                   - Kearl and Cold Lake (Imperial Oil)
  generation. In addition to providing the facility with steam
  needed for operations and reducing direct GHG emissions,                                 - Fort Hills, Firebag, and Mackay River (Suncor)
  the cogeneration units will export 800 megawatts (MW) of                                - Horizon, Primrose, Muskeg River, and Scotford
  electricity to the provincial grid, equivalent to roughly 7%                          		 (Canadian Natural)
  of Alberta’s current electricity demand. The GHG intensity
                                                                                           - Long Lake (CNOOC International)
  of the power produced from these cogeneration units is
  approximately 75% lower than coal-fired power generation,                                - Christina Lake and Foster Creek (Cenovus)
  reducing GHG emissions by approximately 5.1 megatonnes                                   - Syncrude
  (MT) per year in Alberta. This is equivalent to displacing
  more than 1,000,000 cars from the road.                                                 - Other projects (not CAPP members) include
                                                                                        		 Christina Lake (MEG), Lindbergh (Cona Resources),
                                                                                        		 and Harmattan (Altagas).

                                                  Cogeneration facility at Fort Hills. Photo courtesy Suncor.

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UPSTREAM ELECTRICITY -
LOW OR NON-EMITTING
SOURCES
Where upstream production projects are in close proximity
to low-emission electricity sources such as hydro, that
electricity can be used to power part or all of a facility,
thus avoiding combustion of other fuels. Renewable power
generation at existing facilities, especially wind or solar
generation, is another option.

Using hydroelectricity to operate upstream natural
gas production in northeastern B.C. offers significant
opportunities to reduce overall emissions for production of
liquefied natural gas (LNG).

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Examples of upstream electrification:

• ARC Resources designed and built its Dawson Creek
  natural gas processing facility to produce fewer emissions.
  From 2010 to 2018, the plant reduced emissions by 539,743
  tonnes of CO2e using technologies including electric-driven
  compressors, and an instrument-air system instead of
  instrument-gas that eliminates the need for venting. The
  entire facility is linked to the B.C. hydroelectric grid. In 2018,
  ARC electrified its Parkland and Sunrise facilities, reducing
  emissions by approximately 85% or more than 100,000
  tonnes of CO2e.

• Shell Canada designed its B.C. Saturn natural gas
  processing plant to operate on hydroelectricity instead of
  natural gas. As a result, direct emissions from the plant are
  about 90% lower than if the plant operated on natural gas,
  representing a reduction of 150,000 tonnes of CO2 per year.

• LNG Canada – with increased electrification of source
  natural gas production, and partial electrification of the
  LNG facility itself (under construction near Kitimat, B.C.),
  GHG emissions from LNG Canada will be lower than any
  facility currently operating anywhere in the world. LNG
  Canada estimates its facility will be 35% lower than the
  world’s best-performing facilities and 60% lower than the
  global weighted average.

• Hydroelectricity powers the majority of Ovintiv’s gas
  processing in the Montney area of northeastern B.C.
  Its Saturn, Sunrise, and Tower processing plants can avoid
  up to 860,000 tonnes of CO2e emissions annually versus
  gas-driven facilities, comparable to the emissions from
  184,000 vehicles per year. Electrification has the added
  benefit of reducing operational noise compared to non-
  electric facilities.

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PARAFFINIC FROTH
                                                                                  TREATMENT TECHNOLOGY
                                                                                  Froth treatment uses hydrocarbon-based gravity separation
                                                                                  to remove water and fine solids from bitumen froth produced
                                                                                  in the oil sands mining extraction process. For more than
                                                                                  30 years, naphthenic froth treatment (NFT) was the only
                                                                                  technology available to dilute bitumen froth. Paraffinic froth
                                                                                  treatment (PFT) uses a much lighter diluent. As asphaltenes
                                                                                  precipitate, water and fine solids become bound to the
                                                                                  asphaltene, resulting in a bitumen product that meets
                                                                                  pipeline specifications and can be sold directly to a high-
                                                                                  conversion refinery without the need for further upgrading,
                                                                                  thus reducing overall emissions.

                                                                                  PFT has been deployed at Fort Hills (Suncor), Kearl (Imperial)
                                                                                  and Athabasca Oil Sands Project (Canadian Natural) and is
                                                                                  likely to be deployed at all new oil sands mining operations.
                                                                                  This is a proven technology that is substantially reducing
                                                                                  overall emissions, allowing operators to extract carbon from
                                                                                  produced oil and bringing full life cycle emissions in line
                                                                                  with the average U.S. production emissions (see page 37).
                                                                                  According to IHS Markit (2020), the ramp-up of the Fort Hills
                                                                                  oil sands project alone accounted for nearly three-quarters
              Imperial’s Kearl oil sands mine uses paraffinic froth               of the 2017-2018 overall oil sands emissions reduction
              treatment to lower emissions. Photo courtesy Imperial.              (see page 32).

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Near-term /
Potential Technologies
In the oil sands sector, a number of
processes and technologies aimed
at further reducing emissions by
reducing or eliminating the need
to generate steam for bitumen
recovery are being tested at lab
and field scales.

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Foster Creek oil sands. Photo courtesy Cenovus.

SOLVENT AND
SOLVENT-ASSISTED                                                                   Examples:

EXTRACTION PROCESSES                                                               • At its Cold Lake project, Imperial is reducing GHG
                                                                                     emissions intensity with its Liquid Addition to Steam for
Increasingly, in situ oil sands projects are using solvent                           Enhancing Recovery (LASER) technology. In 2021 Imperial
alone, or combinations of solvents and steam processes, to                           expanded commercial application to the Makheses field at
reduce the steam-to-oil ratios (SOR) and to improve bitumen                          Cold Lake.
recovery. In this context, ‘solvents’ are light hydrocarbons
                                                                                   • At its Foster Creek and Christina Lake projects, Cenovus
such as propane that are injected into the bitumen reservoir
                                                                                     is testing solvent-aided processes using a range of natural
to reduce bitumen viscosity, allowing the mixture to be
                                                                                     gas liquids to improve oil recovery, reduce emissions
pumped to the surface. Solvents are recovered and re-used.
                                                                                     and water use, and lower operating costs. The company
The addition of solvents also has the benefit of lowering
                                                                                     expects a minimum one-third emissions reduction benefit
water treatment requirements, and increasing plant capacity
                                                                                     from solvent use with the potential for much
by reducing or replacing steam generation requirements,
                                                                                     greater reductions.
thereby lowering overall emissions. The use of solvents
reduces and may potentially eliminate the need for energy-                         • Canadian Natural has been piloting the use of solvents at
intensive steam production for in situ extraction.                                   its Kirby SAGD facility, with up to 45% reduction in SOR.
                                                                                     Based on these results, in 2021 the pilot will be expanded
Advanced field pilots have been completed by Imperial,
                                                                                     to the company’s Primrose cyclic steam stimulation project
Cenovus and ConocoPhillips, and successfully demonstrated
                                                                                     near Cold Lake, Alberta.
meaningful increases in productivity, as well as decreases in
SOR and water use. Several others are in various stages of
testing similar applications.

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ELECTROMAGNETIC (EM)
HEATING PROCESSES
Similar in concept to a household microwave oven, EM
waves from long antennae drilled into a deep oil sands
deposit excite water molecules in the deposit. This generates
frictional heat, which raises temperatures within the reservoir
and lowers the bitumen’s viscosity, allowing it to be pumped
to the surface. Solvents (light hydrocarbons) are commonly
injected into the reservoir to further dilute the bitumen.
Solvents are recovered and re-used. The EM process
eliminates the need for steam generation, thus reducing
emissions that would be associated with burning natural gas
to create steam.

Example:

• Together with a consortium of partners and financial
  support from Alberta Innovates, Suncor Energy is field-
  piloting Enhanced Solvent Extraction Incorporating
  Electromagnetic Heating (ESEIEH®) at its Dover oil sands
  development. This process uses EM heating and solvent
  injection to recover bitumen without the need for steam
  generation and injection. Pilot results are expected in 2022.

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HAUL TRUCKS AND                                                            PARTIAL UPGRADING
MATERIALS HANDLING                                                         Partial upgrading produces bitumen of pipeline quality
                                                                           without the need for diluent, which reduces the energy
New haul truck technology or fuel alternatives such as                     required to upgrade the bitumen and results in an estimated
electric or trolley assist, and alternative modes of material              reduction of well-to-refinery emissions up to 12%.
transport to shorten haul distance, are being piloted at
several oil sands mining sites. Timing of deployment and
technology type depends on individual mines, but the
potential for substantial emissions reductions appears
high. Imperial, Canadian Natural and Syncrude have pilot
projects underway, while Suncor has fully deployed the use
of automated haul trucks at its North Steepbank and Fort
Hills mines - the company continues to assess the impact on
emissions reduction.

                                                                                                                                         E
METHODOLOGY        IN SITU OIL     MINED OIL      NATURAL GAS   OFFSHORE   TECHNOLOGY       RESEARCH
                                                                                                                                         25
Ongoing Collaboration
and Research
Research and development of new
technologies across the natural
gas and oil industry is active and
continually evolving.
Canada’s upstream industry has created a unique
innovation environment aimed at improving
environmental performance across the industry,
though collaboration-based organizations such as
Canada’s Oil Sands Innovation Alliance (COSIA),
Petroleum Technology Alliance Canada (PTAC),
Clean Resource Innovation Network (CRIN), Natural
Gas Innovation Fund (NGIF), Petroleum Research
Newfoundland and Labrador (PRNL), funded
independent partnership organizations such as
Evok Innovations, plus government-based initiatives
such as Alberta Innovates and Emissions Reduction
Alberta, in addition to post-secondary institutions and
companies’ own internal research.

                                                                                                   E
METHODOLOGY        IN SITU OIL     MINED OIL      NATURAL GAS   OFFSHORE   TECHNOLOGY   RESEARCH
                                                                                                   26
DIRECT CONTACT
STEAM GENERATION
The direct contact steam generation (DCSG) process
involves steam generation from combustion of fuel gas with
oxygen in direct contact with feed water in a high-pressure,
high-temperature combustor. This creates a mixture of steam
and CO2 that replaces steam required for in situ injection,
generated using conventional boiler technology. DCSG has
                                                                              OFFSHORE WIND-SOURCED
the potential to reduce emissions because a significant
portion of the CO2 can be sequestered underground. DCSG
                                                                              ELECTRIFICATION
also recycles 90% of the water used, requiring 10% of                         A scoping study to electrify offshore production facilities
additional water that could be sourced from existing tailings                 via development and installation of offshore wind farms
ponds. Suncor and Canadian Natural are researching and                        is underway. This research includes recommendations
testing this process.                                                         for specific equipment and design criteria that could be
                                                                              implemented in different contexts including brownfield and
                                                                              greenfield developments.

                                                                              BLUE HYDROGEN
                                                                              Hydrogen is an energy-dense fuel that can be used in many
                                                                              ways, from industrial applications to heating, producing
                                                                              electricity and more. When combusted, hydrogen produces
                                                                              no CO2 or other GHG emissions — the only byproduct is
                                                                              water. ‘Blue’ hydrogen is derived from natural gas, with
                                                                              produced CO2 captured and injected into deep rock or
                                                                              saline formations for permanent storage. Understanding
                                                                              and piloting the technology to support the commercial
                                                                              advancement of blue hydrogen production is ongoing. The
   ELECTRIFICATION                                                            Alberta government’s Natural Gas Vision and Strategy
   OF FPSO VESSELS                                                            includes provisions for blue hydrogen technology.

   Offshore installations are not connected to existing power
   grids so must generate their own electricity, which is a
   leading source of emissions. Preliminary research of the
                                                                              DIRECT AIR CAPTURE
   potential for electrifying greenfield floating production,                 Direct air capture is a technology that captures CO2 directly
   supply and offloading (FPSO) vessels using power from                      from the air with an engineered, mechanical system. The CO2
   shore is ongoing. Preliminary results demonstrate that                     can be permanently stored in deep geological formations or
   electrification is possible, though not economically feasible              used in the production of fuels, chemicals, building materials
   based on current offshore activity levels.                                 and other products.

                                                                                                                                               E
METHODOLOGY        IN SITU OIL      MINED OIL      NATURAL GAS     OFFSHORE   TECHNOLOGY        RESEARCH
                                                                                                                                               27
OTHER OFFSHORE INITIATIVES                                                Examples:

                                                                          • During maintenance programs, operators look at methods
Canada’s offshore industry has invested over $600 million                   to improve efficiency of operation for power generation
in research and development, education and training,                        units and other key equipment, subsequently reducing
including research focused on generating knowledge about                    emissions.
environmental conditions and reducing existing and potential
environmental risks.                                                      • Supply vessels use fuel management and monitoring
                                                                            systems to ensure vessels are operating as efficiently as
                                                                            possible and continue to consider new technology as it
                                                                            becomes available.

                                                                          • Operators are implementing fugitive emissions monitoring
                                                                            systems that use optical gas imaging cameras, facilitating
                                                                            rapid leak detection and repair.

                                                                          • Work is underway internationally in the marine
                                                                            transportation industry to use alternative low-carbon fuels.

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METHODOLOGY       IN SITU OIL     MINED OIL      NATURAL GAS   OFFSHORE   TECHNOLOGY        RESEARCH
                                                                                                                                           28
Emissions Intensity
Performance Data
The following data demonstrates the industry’s emissions intensity
reduction performance to date. With ongoing development and
deployment of technologies and initiatives described in Technology
Overview, additional significant reductions can be expected. The
industry takes a collaborative, solutions-oriented approach to achieving
more reductions and the industry’s climate objectives are compatible
with provincial and federal objectives. The sector is committed to
playing a pivotal role in helping Canada meet its stated emissions
reduction goals, while maintaining a strong economic focus that
includes nationwide employment, government revenue generation, and
supporting quality of life with fuels and products Canadians depend on.

To clearly demonstrate the ongoing emission intensity reductions across
the natural gas and oil industry arising from advanced technologies and
process efficiencies, CAPP developed trend graphs using a bottom-
up analysis for oil sands and offshore sectors that utilizes individual
facilities’ emissions data to create an overview of the sector’s total
emissions. The analysis includes both direct (Scope 1) and indirect
(Scope 2) emissions. For natural gas emissions, CAPP used a top-down
analysis whereby the sector is evaluated holistically. For comparison,
graphs also show ‘leading’ performance for Canadian oil sands and
natural gas production.

Within the oil sands sector, the biggest driver of direct emissions is
natural gas combustion for steam or hot water generation, while the
largest sources of indirect emissions are from diluent, land use, and
imported electricity from the Alberta power grid (which currently uses
mostly coal and natural gas-fired generation).

                                                                                                       E
METHODOLOGY       IN SITU OIL      MINED OIL      NATURAL GAS       OFFSHORE   TECHNOLOGY   RESEARCH
                                                                                                       29
NATURAL GAS,
NATURAL GAS LIQUIDS
(NGLS), AND CONDENSATE                                                                                                                             Data on this graph represents emissions intensity from
                                                                                                                                                   natural gas extraction and processing, NGLs, and condensate
Production and Greenhouse Gas Intensity
                MINING OS GHG  INTENSITY
                                                                                                                                                   production. From 2011 to 2019, emissions intensity decreased
                                                                                                                                                   by 33% in this sector. During the same period, natural gas
                   1,600                                                                           100                                             production in B.C. doubled and there was an increase in
                   1,400
                                                                                                   90                                              liquids-rich natural gas production in both B.C. and Alberta.
                                                                                                   80
                                                                                                                                                   The leading performance lines are estimated from a new

                                                                                                             GHG Intensity kgCO2e/bbl
                   1,200                                                                                                                           design gas-driven facility for both sour and sweet gas inlets.
                                                                                                   70
Production (boe)

                   1,000
                                                                                                   60                                              Another noteworthy performance indicator (not shown
    Millions

                                                                                                                                                   in the graph) is emissions intensity per kilowatt-hour
                    800                                                                            50
                                                                                                                                                   (kWh) of electricity consumed for natural gas producing
                                                                                                   40                                              and processing. In Alberta, over the period 2010 to 2019,
                    600
                                                                                                   30                                              emissions per kWh declined from 1,100 grams of CO2
                    400                                                                                                                            equivalent (CO2e) per kWh to 670 g CO2e / kWh.
                                                                                                   20
                    200
                                                                                                   10                                              Improved emissions management, particularly actions aimed
                       –                                                                           0                                               at achieving methane emissions reduction targets and multi-
                           2010   2011    2012   2013   2014   2015    2016   2017   2018   2019
                                                                                                                                                   well drilling pad approaches, are key drivers in emissions
                           Annual Production (boe)                    Sector GHG Intensity (kgs CO2e/bbls)                                         intensity reduction in this sector.

                           Leading Design Sweet GHGI                  Leading Design Sour GHGI

Source: Environment and Climate Change Canada (2021 NIR Report), CER,
Report Envirotech Engineering.

                                                                                                                                                                                                                    E
  METHODOLOGY                            IN SITU OIL                  MINED OIL              NATURAL GAS                                OFFSHORE      TECHNOLOGY        RESEARCH
                                                                                                                                                                                                                    30
OIL SANDS IN SITU
           INSitu
Oil Sands In  SITUProduction
                   OIL SANDSand
                             PRODUCTION   AND
                                Emissions Intensity                                                                                                 Data on the graph includes both steam-assisted gravity
               GREENHOUSE GAS INTENSITY                                                                                                             drainage (SAGD) and cyclic steam stimulation (CSS)
                                 600                                                                    100                                         production, Scope 1 and 2 emissions. Data indicates an
                                                                                                                                                    emissions intensity reduction of 8% between 2013 and 2019
                                                                                                        90
                                 500
                                                                                                                                                    while production increased 66%. Production curtailment,
Production (bitumen barrels)

                                                                                                        80                                          mandated by the provincial government in response to very
                                                                                                              GHG Intensity kgCO2e/bbl

                                                                                                        70                                          wide price differentials between Western Canada Select
                                 400
                                                                                                        60
                                                                                                                                                    crude oil produced in Alberta and West Texas Intermediate
                                                                                                                                                    crude, affected in situ emissions intensity in 2019. A wildfire
          Millions

                                 300                                                                    50
                                                                                                                                                    in 2016 resulted in the temporary shutdown of many in situ
                                                                                                        40                                          oil sands projects.
                                 200
                                                                                                        30
                                                                                                                                                    The optimization of SAGD projects has substantially
                                 100
                                                                                                        20                                          contributed to emission intensity reductions. The use of
                                                                                                        10                                          electric submersible pumps (ESPs) has enabled better
                                                                                                                                                    well control and more efficient operations. Wedge or infill
                                    –                                                                   0
                                           2013     2014      2015         2016    2017   2018   2019                                               wells optimize production from already-heated reservoirs,
                               Total Production
                                                                                                                                                    capitalizing on previous combustion and steam injection, and
                               Sector Production Weighted Average GHGI
                                                                                                                                                    have been widely deployed. Steam generation efficiency is
                               Leading Perfomance GHGI (Lowest Intesity)                                                                            also a key determinant for reducing emissions intensity for in
                                                                                                                                                    situ projects.
Source: Alberta Environment and Parks Alberta Oil Sands Greenhouse Gas
Intensity Analysis, AER ST53, NIR 2021 Part 3. GHGI PWA = greenhouse gas
intensity production weighted average.

                                                                                                                                                                                                                      E
METHODOLOGY                                         IN SITU OIL                   MINED OIL       NATURAL GAS                            OFFSHORE      TECHNOLOGY         RESEARCH
                                                                                                                                                                                                                      31
OIL SANDS MINING
                 MINING OS and
Oil Sands Mining Production GHGEmissions
                                INTENSITYIntensity

                                600                                                                100

                                                                                                   90
                                500
Production (bitumen barrels)

                                                                                                   80

                                                                                                         GHG Intensity kgCO2e/bbl
                                                                                                   70
                                400
                                                                                                   60
          Millions

                                300                                                                50

                                                                                                   40
                                200
                                                                                                   30

                                                                                                   20
                                 100
                                                                                                   10

                                    –                                                              0
                                          2013     2014      2015     2016    2017   2018   2019

                               Total Production
                               Sector Production Weighted Average GHGI
                               Leading Perfomance GHGI (Lowest Intensity)

Source: Alberta Environment and Parks Alberta Oil Sands Greenhouse
Gas Intensity Analysis, AER ST 39. GHGI PWA = Greenhouse Gas Intensity
Production Weighted Average.

For the oil sands mining sector, data indicates an emissions
intensity reduction of 14% between 2013 and 2019 while
production increased 59%. There was a substantial emissions
intensity decrease in 2017-2018 after Suncor Energy’s Fort
Hills mining project started operation in 2017, as this is a
PFT mine with a lower emission intensity than past projects.
Wildfires in 2016 affected oil sands mining production and
emissions intensity.

                                                                                                                                                                       E
 METHODOLOGY                                        IN SITU OIL              MINED OIL       NATURAL GAS                            OFFSHORE   TECHNOLOGY   RESEARCH
                                                                                                                                                                       32
Canada’s offshore industry currently consists of four major
                                                                                                                                                projects: Hibernia, Terra Nova, White Rose and Hebron.
OFFSHORE
                                                                                                                                                Emissions related to offshore production in NL represent
Offshore Production and Emissions Intensity                                                                                                     14% of the province’s total emissions. The most significant
                                                                                                                                                emissions sources in the offshore include:
                   120                                                                              100
                                                                                                                                                • The need to generate electricity for each offshore
                                                                                                    90                                            installation, requiring natural gas combustion (no
                   100
                                                                                                    80                                            opportunity to utilize onshore electricity infrastructure).
                                                                                                          GHG Intensity kgCO2e/bbl
                                                                                                    70                                          • Flaring - offshore operators have reduced flaring
                   80
Production (boe)

                                                                                                    60
                                                                                                                                                  significantly through the Global Gas Flaring
                                                                                                                                                  Reduction Partnership.
    Millions

                   60                                                                               50
                                                                                                                                                • Operators are working to manage and reduce emissions
                                                                                                    40
                   40
                                                                                                                                                  through operational efficiencies and preventative
                                                                                                    30                                            maintenance, which in turn reduces energy consumption.
                                                                                                    20
                   20                                                                                                                           Overall emissions volumes from Canada’s offshore operations
                                                                                                    10                                          are low. Factors affecting emissions intensity include:
                     –                                                                              0
                         2009 2010   2011   2012   2013   2014   2015   2016   2017   2018   2019
                                                                                                                                                • A field’s age and ongoing production causes decreasing
                                                                                                                                                  reservoir pressure, requiring additional solution gas
                                 Annual Production                             Sector Intensity                                                   management and higher gas injection volumes into the
                                                                                                                                                  reservoir, which results in higher emissions intensity.

Source: Environment and Climate Change Canada, Canada-Newfoundland and
                                                                                                                                                • New offshore facilities generally have higher emissions
Labrador Offshore Petroleum Board                                                                                                                 intensity for the first few years of production before
                                                                                                                                                  achieving steady state when emissions intensity stabilizes.

                                                                                                                                                                                                                E
METHODOLOGY                           IN SITU OIL                  MINED OIL                  NATURAL GAS                            OFFSHORE      TECHNOLOGY         RESEARCH
                                                                                                                                                                                                                33
Comparable
Emissions
Performance and
Data Quality

                                                                                         E
METHODOLOGY   IN SITU OIL   MINED OIL   NATURAL GAS   OFFSHORE   TECHNOLOGY   RESEARCH
                                                                                         34
Comparing Canada’s emission intensity performance with
other producing nations and regions provides context for
Canada’s efforts and success to date. However, due to
challenges concerning data quality and availability from
other producing jurisdictions, direct comparisons are                             Canada is a world
problematic. Many data sets and comparison tools are based
on inaccurate assumptions and incomplete data, so don’t                           leader in transparent
offer a robust, factual overview of emissions from other
jurisdictions. For example, some data sets do not include                         data collection, and the
methane emissions although methane is a much more potent
greenhouse gas than CO2.                                                          Canadian oil and natural
This poses a strong risk that the investment community may                        gas industry has among
make important decisions on potentially faulty data. It is vital
to ensure proper comparison of data between jurisdictions
                                                                                  the strongest public data
to ensure an accurate picture, which in turn will help the
investment community to make decisions based on the best
                                                                                  in the world.
possible data and performance. Canada is a world leader in
transparent data collection, and the Canadian oil and natural
gas industry has among the strongest public data in
the world.

                                                                                                              E
METHODOLOGY         IN SITU OIL      MINED OIL      NATURAL GAS    OFFSHORE   TECHNOLOGY   RESEARCH
                                                                                                              35
OIL
                                                                 Currently, two groups are progressing global emission
                                                                 comparisons that CAPP believes are robust and credible:

                                                                 • The Oil-Climate Index (OCI) – a tool created by Carnegie-
                                                                   Mellon University in collaboration with Stanford University
                                                                   and the University of Calgary to estimate and compare
                                                                   total lifecycle emissions of individual crude oil types,
                                                                   from upstream production through midstream refining
                                                                   to downstream end use. Imperial, Canadian Natural
                                                                   and several other oil sands producers are continuing to
                                                                   engage with OCI authors to review and update Canadian
                                                                   benchmarks and explore the impacts of new technologies
                                                                   on Canada’s production lifecycle emissions intensity. The
                                                                   OCI currently includes more than 75 crudes from various
                                                                   global sources and aggregates three emission estimation
                                                                   models, including the Oil Production Greenhouse Gas
                                                                   Emissions Estimator (OPGEE).

                                                                 • IHS The Right Measure – a report by IHS Markit expected
                                                                   to be released in 2021 that will review other estimates
                                                                   and create a methodology to quantify and qualify
                                                                   emissions estimates to facilitate their interpretation and
                                                                   comparability. Funded in part by the Alberta government,
                                                                   this study seeks to develop a shared understanding of
                                                                   which emissions should be included in the analysis, increase
                                                                   the transparency around estimate quality, and create
                                                                   benchmarks for crude refined in the U.S.

                                                                 Alberta Innovates Study

                                                                 A study led by Stanford University, the University of Calgary
                                                                 and the University of Toronto in collaboration with Alberta
                                                                 Innovates and published in the Journal of Cleaner Production,
                                                                 concluded that when Alberta-specific data is used in OPGEE,
                                                                 upstream GHG intensity numbers of oil sands production
                                                                 pathways are as much as 35% lower than previously
                                                                 published, making them comparable to other crudes.
                                                                 The study also demonstrated that current use of PFT
                                                                 technology is producing crude with intensities lower
                                                                 than the global average.

                                                                                                                                  E
METHODOLOGY   IN SITU OIL   MINED OIL   NATURAL GAS   OFFSHORE    TECHNOLOGY        RESEARCH
                                                                                                                                  36
Emissions Intensity – Canada, U.S., Venezuela Crudes
 Based on the findings of the Alberta
 Innovates study, a re-evaluation of OCI                                                                              250

 values demonstrates a decrease in oil
                                                                                                                      200

                                                                                        kg CO2 eq./barrel crude
 sands emissions intensity. Deployment
 of additional technologies, such as SA-                                                                              150
 SAGD (solvent-assisted SAGD, using light
 hydrocarbons instead of steam to recover                                                                             100

 bitumen), offers further opportunities to
                                                                                                                       50
 reduce emissions intensity even more,
 such that the oil sands industry could                                                                                  –
 outperform comparable crudes.
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                                                 SCO = synthetic crude oil

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                                           CSS = cyclic steam stimulation                                                                      Orginal OCI Estimate                     Adjusted to reflect Alberta context (AI study)
                                 SAGD = steam-assisted gravity drainage
                                                                                        Source: Oil Climate Initiative

                                                                                                                                                                                                                                                                  E
METHODOLOGY   IN SITU OIL           MINED OIL         NATURAL GAS            OFFSHORE                                 TECHNOLOGY                              RESEARCH
                                                                                                                                                                                                                                                                  37
NATURAL GAS
Highest Natural Gas Flaring Countries vs. Canada (Bcf)

 800

                                                                                                                                                                         Analysis by BMO Capital Markets indicates that as a result
 700
                                                                                                                                                                         of flaring practices, Canada is among the lowest-intensity
 600                                                                                                                                                                     natural gas producers globally. According to research by the
                                                                                                                                                                         Canadian Energy Centre (CEC) — which in 2020 released
 500
                                                                                                                                                                         an analysis of flaring and emissions data from the World
400
                                                                                                                                                                         Bank, the U.S. Energy Information Administration and the
                                                                                                                                                                         International Energy Agency — Canada’s emissions from
 300                                                                                                                                                                     flaring decreased by 38% while production increased by
                                                                                                                                                                         22% between 2014 and 2018. The CEC’s analysis confirmed
 200                                                                                                                                                                     work released in 2018 by Stanford University, which
                                                                                                                                                                         estimated that if Canada’s flaring regulations were adopted
 100
                                                                                                                                                                         by other energy-producing nations, global emissions from oil
                                                                                                                                                                         and natural gas production could be lowered by up to 23%.
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                                                                                                                                                                         If Canada’s flaring
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Source: BMO Capital Markets

                                                                                                                                                                                                                                        E
METHODOLOGY                            IN SITU OIL                                    MINED OIL                          NATURAL GAS                          OFFSHORE   TECHNOLOGY       RESEARCH
                                                                                                                                                                                                                                        38
OFFSHORE
Offshore Project OFFSHORE
                 Upstream   Emissions
                          GHG INTENSITY Intensity

                           100

                           90
 KG CO2 EQ./BARREL CRUDE

                           80

                           70

                           60

                           50

                           40

                           30

                           20

                            10

                            0
                                 Norway     Canada        Mexico      Norway     UK Forties   Norway
                                 Ekofisk    Hibernia     Cantarell     Skarv       Blend      Oseberg

                                                  JURISDICTION AND PROJECT

Source: Oil Climate Index

This graph represents upstream data sourced from OCI for
Canada’s offshore, with Hibernia being the only Canadian
project for which data is available to OCI. Canadian offshore
(Hibernia) emissions intensity compares favourably with
other offshore producers in part because the oil itself is
                                                                                                                   The offshore industry is part
sweeter (lower sulphur content).                                                                                   of the solution to a lower
Offshore oil and natural gas operators in Newfoundland and
Labrador (NL) are committed to working with policy makers
                                                                                                                   carbon energy future and to
and other stakeholders to address climate change and are                                                           the long-term diversification
working with and supporting governments in achieving
governments’ net zero goals. The offshore industry is part of                                                      of NL’s economy.
the solution to a lower carbon energy future and to the long-
term diversification of NL’s economy.

                                                                                                                                                   E
METHODOLOGY                                IN SITU OIL               MINED OIL            NATURAL GAS   OFFSHORE    TECHNOLOGY   RESEARCH
                                                                                                                                                   39
C A P P.C A

2021-0016 - JULY, 2021
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